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Line of Credit and Borrowing Agreements

12 Months Ended

Oct. 29, 2021

Line Of Credit And Borrowing Agreements

NOTE 5 - Line of Credit and Borrowing Agreements:

The following table reflects major components of our line of credit and borrowing agreements as of October 29, 2021 and October 30, 2020.

	October 29, 2021			October 30, 2020

Revolving credit facility	$	12,000		$	-
Equipment notes:
4.13% note due 12/24/25, out of lockout 12/26/20		-			5,823
3.98% note due 04/21/26, out of lockout 04/23/21		-			6,145
3.70% note due 12/21/26, out of lockout 12/23/21		2,901			3,393
3.29% note due 03/05/27, out of lockout 03/06/22		5,951			6,940
3.68% note due 04/16/27, out of lockout 04/17/22		5,888			6,821
SOFR plus 2.00% bridge loan due 03/01/23		10,329			-
Total debt		37,069			29,122
Less current debt		(1,065	)		(4,430	)
Total long-term debt	$	36,004		$	24,692

Revolving Credit Facility

We maintain a line of credit with Wells Fargo Bank, N.A. that extends through March 1, 2022 (extended to March 1, 2023, per expanded line of credit signed December 1, 2021). As of October 29, 2021, under the terms of this line of credit, we may borrow up to $15,000 at an interest rate equal to the bank’s prime rate or LIBOR plus 2.0%. The line of credit has an unused commitment fee of 0.25% of the available loan amount. We borrowed $2,000 under this line of credit on December 2, 2020, $2,000 on April 27, 2021, $2,000 on July 1, 2021, $3,000 on July 19, 2021 and $3,000 on October 15, 2021, for a combined total of $12,000. The line of credit is presented under non-current liabilities in the Consolidated Balance Sheets. On December 1, 2021, Wells Fargo Bank, N.A. expanded our line of credit to $25,000 through June 15, 2022 upon which the credit limit will return to $15,000 for the balance of the term. Under the terms of this expanded line of credit, we may borrow up to $25,000 at an interest rate equal to the bank’s prime rate or secured overnight financing rate (“SOFR”) plus 2.0%. Under the amended line of credit, the benchmark interest rate of LIBOR has been transitioned to SOFR which could impact the cost of credit and alter the value of debt and loans. We borrowed an additional $2,000 on November 1, 2021, and $2,000 on December 16, 2021. Refer to Note 1 – Subsequent Events of the Notes to Consolidated Financial Statements included in this Report for further information.

Equipment Notes Payable

On December 26, 2018, we entered into a master collateral loan and security agreement with Wells Fargo Bank, N.A. (the “Original Wells Fargo Loan Agreement”) for up to $15,000 in equipment financing which was amended and expanded as detailed above. We subsequently entered into additional master collateral loan and security agreements with Wells Fargo Bank, N.A. on each of December 19, 2019, March 5, 2020, and April 17, 2020 (the Original Wells Fargo Loan Agreement and the subsequent agreements collectively referred to as the “Wells Fargo Loan Agreements”). Pursuant to the Wells Fargo Loan Agreements, we owe the amounts as stated in the table above.

Bridge Loan

On August 30, 2021, we entered into a loan commitment note for a bridge loan of up to $25,000 which we plan to use to pay off the existing equipment loans as they come out of the lock out period and may be prepaid (dates detailed in the table above). The outstanding principal balances of the bridge loan shall be due and payable in full on the earlier of the following dates (1) August 31, 2023 or (2) one Federal Reserve business day after the closing of the transactions contemplated under that certain Purchase and Sale Agreement dated March 16, 2020, as amended, between Bridgford Foods Processing Corporation and CRG Acquisition, LLC (the “March 2020 Purchase and Sale Agreement”. As of October 29, 2021, we prepaid $10,328 in equipment loans (equipment loans 4.13% and 3.98% above) utilizing proceeds from the new bridge loan. The Company evaluated the exchange under ASC 470 and determined that the exchange should be treated as a debt modification prospectively. The Company accounted for this transaction as a debt modification and did not incur any gain or loss relating to the modification. The debt modification did not meet the greater than ten percent test and was deemed not substantial. On January 12, 2022, we paid off $2,778 in equipment loans (equipment loan 3.70% above) utilizing proceeds from the new bridge loan. Refer to Note 1 - Subsequent Events for further information.

Loan Covenants

The Wells Fargo Loan Agreements contain various affirmative and negative covenants that limit the use of funds and define other provisions of the loan. The main financial covenants are listed below:

	●	Total Liabilities divided by Tangible Net Worth not greater than 2.5 to 1.0 at each fiscal quarter,
	●	Quick Ratio not less than .85 to 1.0 at each fiscal quarter end
	●	Fixed Charge Coverage Ratio not less than 1.25 to 1.0 as of each fiscal quarter end, determined on a trailing 4-quarter basis and
	●	Capital Expenditures less than $5,000.

The Company was in violation of the capital expenditure and fixed charge coverage ratio covenant which were subsequently waived (per letter dated January 25, 2022). The Company was in compliance with all other covenants under the Wells Fargo Loan Agreements as of October 29, 2021

Aggregate contractual maturities of debt in future fiscal years are as follows as of October 29, 2021.


Fiscal Years	Debt Payable
2022	$	1,065
2023	$	23,761
2024	$	2,588
2025	$	2,681
2026-2027	$	6,974